The history of microfinance in Nepal is relatively new and
the government's attempt to promote microfinance services dates back
to 1975. It was recognized as an official poverty alleviation
program only in the country’s sixth plan (1980/81-1984/85). It
however gained momentum after the restoration of democracy in 1991.
Microfinance is often seen as an effective strategy for
extending financial services to the poor and other disadvantaged
groups not reached by the formal finance sector. Despite its
tremendous potential to alleviate human poverty, only 33% of
households below the poverty line have access to it. There is even a
greater need to expand microfinance services in the high hills and
Nepal has a wide
range of active microfinance institutions that provide financial
services to the poor in their own way. These institutions are
regulated by government acts such as:
Bank and Financial Institution Ordinance (2004)
Cooperative Act (1991)
Financial Intermediary Act
Within the available legal and regulatory framework and
actively involved in the microfinance sector are:
Four Microfinance Development Banks
Five Grameen Bikas Banks
Over 1800 Savings and Credit Cooperatives
Over 200 Small Farmers Cooperatives
Over 44 Financial Intermediary NGOs
Three categories of second tier refinance institutions have
been established to provide wholesale loans to different MFIs in
Nepal such as:
Rural Self-Reliance Fund
Rural Microfinance Development Center
Sana Kisan Bikas Bank (Small Farmers Development Bank).
INAFI Nepal has
been established as a network organization of microfinance
practitioners and promoters to strengthen the microfinance sector in
INAFI Nepal Member Organizations:
At present, the following are the member organization of
Asia Partnership-Nepal (SAP-Nepal), Kathmandu.
Utthan Bank Ltd. (NUBL), Bhairahawa
Cooperative Society Ltd (WCS), Kathmandu
for Self-Help Development (CSD-Nepal), Kathmandu
Society of Local Volunteers' Effort (SOLVE-Nepal), Dhankuta
Swabalamban Bikas Bank Ltd. (SB Bank), Janakpur
Development Exchange Centre-Nepal (DEC-Nepal), Chitwan
One of the major interventions of INAFI is Capacity
building, which has been used to enhance the managerial capacity
of its member organizations. With this intervention member
organizations were expected to be better able to plan and manage
their growth, manage operational and credit risks, track and monitor
the impact of their services on poverty, attract and retain clients
and adopt regional standards and benchmarks in managing their
growth. Another intervention of INAFI is research and
documentation of issue-based case studies and the dissemination
of the findings to the stakeholders of micro finance. Advocacy
and Communication is also another main activity of INAFI Nepal.
INAFI Nepal is facilitating and organizing round table discussions,
dialogues and workshops in order to lobby and advocate policy
changes in microfinance institutions. Since member organizations of
INAFI may need to improve their delivery of services to the
community, member service has become an important
intervention to formulate a standard policy to change present
practices. Product development is another intervention that
intends to make member organizations able to design/develop
appropriate financial products and services that attract more women
and poor clients.
means building financial systems that serve the poor. Microfinance
services are possible only when microfinance institutions manage
their activities in a sustainable way. Sustainability is necessary
to reach a significant number of the poor people. Building
sustainable financial systems for the poor means building sound
domestic financial intermediaries that can provide financial
services to poor people on a permanent basis. The financial
sustainability of microfinance programs is not only necessary in
order to reach a large number of poor clients but it has also been
recognized as an integral part of the financial sector and
activities towards sustainability focus on:
importance of self-sustainability of the microfinance program.
managerial capacity of microfinance institutions to achieve
self-sustainability with quality outreach
discuss different ways for operational and financial
self-sustainability of the MF program
Knowledge on the
basic principles of microfinance is necessary to increase public
awareness and an understanding of microfinance. It has been realized
that the MFIs and other stakeholders should understand various
dimensions of micro finance and to improve their delivery systems.
INAFI Nepal assists to strengthen the capacity of Microfinance
institutions through need based training package.
training towards capacity building focus on the following:
the basic concepts/principles, issues, raise awareness, and
develop various methodologies to provide efficient client
friendly microfinance services to the poor.
enhance the inclusion of disadvantaged group including women in
and financial management of MFIs.
business plan for MFIs.
conducted research on thematic issues. Research findings shared with
member organizations, MFIs and the other stakeholders including
policy makers and government agencies.
research on 'Impact of microfinance services on Poverty
Reduction in Nepal'
research on 'Microfinance Services in Insurgency and Conflict
Situation: A Case Study of Nepal'
of the research findings.
and publication of the research report.
Gender in Microfinance
Women in Nepal are often deprived because of mainly social
and legal discrimination. Gender equality is increasingly becoming
the focus of government and citizen concern and a pertinent
challenge for the microfinance sector around the globe. A Gender
perspective in microfinance is necessary for the positive evolution
of human development, which is more than just a strategy for
economic development. Emphasizing the importance of a gender
perspective for the success of microfinance sector, INAFI Nepal
seeks to conceptualize the gender problem in Nepal. INAFI also aims
to provide responses and strategies for mainstreaming gender both at
the client and institutional level and to reinforce gender equality
as a central concern.
activities towards gender and microfinance focus on:
Enhance the conceptualisation and strategy for gender
mainstreaming in micro finance programs.
issues on gender mainstreaming in microfinance.
policy recommendations to mainstream gender in microfinance.
Address of INAFI
GPO 3827 SAP Falcha, Babarmahal,
Phone: +977-1-4223230, 4223050